15/02 India’s inflation accelerates to 8.9% in March

Indian vegetable trader in AllahabadAnalysts believe a rate rise from the Indian central bank is now likely

India’s inflation rate rose to 8.9% from 8.3% in February, driven higher by fuel and manufacturing costs, the government has announced.

The January inflation rate was also revised upwards to 9.35% from 8.23%.

Earlier this week the International Monetary Fund (IMF) warned about inflation building in Asia’s fast-growing economies.

The body said “boom-like dynamics” should not be allowed to get out of control.

The Reserve Bank of India has raised its key interest rate eight times since March 2010.

The cost of borrowing currently stands at 6.75%

Analysts believe another rate rise from the Indian central bank is now likely.

“It seems that inflation trajectory has changed. The expected decline in inflation is just not happening and looks like we have underestimated the underlying pressure on prices,” said Ashutosh Datar, an economist at IIFL in Mumbai.

“More monetary tightening is inevitable after today’s data and the case for a 50 basis point hike in May is strengthened,” he added.

Rising commodity prices are pushing up the rate of inflation across the world.

On Friday China revealed that prices rose by 5.4% in March compared with a year earlier. This was up from 4.9% in February.

The rate of inflation also rose in the eurozone and the US to 2.7%.

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About Uy Do

Banking System Analyst, former NTT data Global Marketing Dept Senior Analyst, Banking System Risk Specialist, HR Specialist
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